SBI pegs advances growth at 17%

Rules out arms merger

State Bank of India (SBI) has pegged a 16.5 per cent growth in advances and a 15 per cent growth in net profit for the current year, while it does not foresee hardening of interest rates in the medium term.

The bank, which is also expecting a 12 per cent rise in net interest income in the current year, has also ruled out any merger with associate banks.

"We do not intend to merge our associate banks in the next three to four years after which we will take a fresh look. As of now technology and other platforms have been merged to provide synergy," A K Purwar, chairman, had said last week at a press conference to announce the bank's annual results.

"The growth in advances would be backed by agribusiness growth, and service sector growth such as trade finance, health, education and tourism. On the retail front, the growth estimated at 36 per cent would be propelled by housing which was likely to grow 40 per cent," he said.

"We intend to disburse an incremental Rs 3,000 crore in the farm sector against Rs 1,300 crore in the previous year," said Purwar

On deposits, Purwar said, "SBI managed to retain only a small 10 per cent of the incoming revenue of Rs 26,000 crore including interest that came into the bank by way to redemption."

This was despite the fact that the bank had taken major steps to hold the outflow of the fund from the bank, which it could not manage.

On non-performing assets, Purwar said, "SBI intends to recover around 1,800 crore of NPAs this year which was around Rs 1,400 crore in 2003-04." The bank was hit hard with the new 90-day-norm, which had an effect of Rs 1,200 crore.

Dabhol, which was classified as a NPA this year has also proved a bane. SBI's exposure to the project was a large Rs 1,400 crore.